News

Borrowing costs for California bullet train are revised upward

Associated Press

Posted:
03/07/2012 06:07:19 AM PST

Updated:
03/07/2012 06:07:27 AM PST

LOS ANGELES -- California's distressed state budget will have to allot more than $700 million each year to repay billions of dollars that officials plan to borrow to build the first phase of a proposed bullet train, a nonpartisan government research office has found.

The repayment projection by the state legislative analyst's office includes principal and interest on $9.95 billion in high-speed rail bonds approved by voters in 2008. The figure is higher than in the past -- partly because of higher borrowing rates -- and does not count millions of dollars already being paid annually on about $500 million in debt incurred to plan the system.

The new estimate is part of an analysis of a proposed statewide vote on the controversial $98.5 billion fast-train link between Los Angeles and the San Francisco Bay Area. The bullet train's impact on the cash-strapped state general fund budget, which funds schools and other basic services, could be a major point of contention in the Legislature this year.

The California High Speed Rail Authority wants to use $2.7 billion of the bond money and $3.3 billion in federal grants to build a 130-mile section of track in the Central Valley.

The entire first phase of the system between San Francisco and Anaheim will cost an estimated $98.5 billion. The cost of the full system, extending to San Diego and Sacramento, has not been calculated.

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With the state short about $86 billion to finish the initial phase, the project has faced increasingly tough questions in Sacramento, even while Gov. Jerry Brown has reiterated his support.

A recent Field Poll found that two-thirds of likely voters in the state want another chance to vote on the project and 59 percent would reject it because of the price tag. The results are similar to those of a public opinion survey done earlier this year by Probolsky Research of Newport Beach, which found that 62.4 percent of likely voters would reject the project if given the chance.

Killing the project now could save the state $709 million annually if additional bond sales are stopped, the legislative analyst said in a letter to the state attorney general last week.